Apple Simplifies Mobile Payments and POS with Tap-to-Pay

Thomas Perry

Apple Simplifies Mobile Payments and POS with Tap-to-Pay

On February 8, Apple announced the release of the new contactless payment system “Tap-to-Pay.” It’s set to disrupt a nearly $1.7 trillion industry and pose a myriad of business opportunities for native iOS development. Should the project proceed as planned, iPhone versions XS and later will be able to accept “Tap-to-Pay” without any additional hardware starting around the fourth quarter of 2022.

Apple Tap-to-Pay Impacts for Merchants

This is huge news for existing and aspiring merchants. The process of accepting secure payments currently enabled by point-of-sale (POS) focused companies like Square or Clover will no longer be a financial burden or a challenge to set up. With this new feature, all a vendor needs to accept contactless debit and credit cards for payment is an iPhone and a bank account.

The Technology Behind Apple Tap-to-Pay

iPhones will leverage near-field communication (NFC), to enable contactless fund transfers between a seller and a buyer’s accounts. This hardware has existed in iPhones since version 7, but until now all smartphones have required some form of external hardware to facilitate payments.

Impact to Other POS Device Manufacturers

Square, the leading designer and manufacturer of these systems, grew smartphone-based POS technology into a massively successful business and helped countless other businesses break into the selling market by providing a relatively easy and cheap way to establish POS.

With the Square system, all a user needs to do at the most basic level is sign up with an account, receive a Stripe reader that inserts into the phone’s audio jack or charging port, and begin taking payments with asmall percentage going to Square. This process has made it easy for vendors to begin selling products for the past decade, but now Apple has made it even simpler. This is tough news for Square’s business, but a welcome opportunity for the promotion of even smaller businesses and perhaps a simplified model for peer-to-peer transactions as well.

Tap-to-Pay Opportunities for Businesses

On the larger stage, businesses that have previously had to rely on clunky, proprietary, and often expensive POS systems can now simplify the checkout flow considerably. We’ve highlighted three ways the tap-to-pay changes can create new opportunities for organizations.

Integrate Payment Into Pre-Existing Smart-Technology: For example, restaurants can integrate payment into pre-existing smart-tech and allow patrons to checkout right from their table, without the need for a server to run back and forth from the table to the register. Of course, most smart-tech in restaurants rely on tablets and Apple’s iPads do not currently have NFC hardware in them, but the assumption is that future models will and this contactless payment announcement will therefore apply to them at some point in the future as well.
Promote Pop-Up Businesses & Faster Purchasing Flows: Additionally, some predict this will promote more pop-up businesses and faster purchasing flows in general since the need to set up major payment infrastructure is no longer necessary as the iPhone becomes the payment terminal. This may allow larger businesses to set up satellite storefronts much faster and easier, allowing business to expand at a faster rate than before.
Improve Customer Experience: Businesses with existing rewards programs for consumers may find it easier to get customers enrolled by providing a stronger user experience and more seamless enrollment process during the checkout phase and the same is true for businesses that may be looking to set up such a program. Customers ordering from their iPhones may even be able to simply tap their card on their screen to checkout and avoid the tedious process of typing in card info.

Apple’s announcement also indicated that Stripe and Shopify will be expanding their technologies to take advantage of the new tap-to-pay capability, paving the way for businesses and storefronts to easily integrate it into their existing flow.

Capitalizing on Apple Tap-to-Pay Opportunities

Of course, working with Apple’s software development kit to integrate the tap-to-pay feature into a new or pre-existing application takes some expertise. There is an additional marketing effort that exists in appropriately leveraging this technology as well. Conveying it to users, leveraging it for business growth, and remaining within legal bounds will all be nuanced problems for businesses to navigate to reach a rewarding solution.

Nevertheless, for many business owners wondering what POS system they need to buy in order to begin taking payments, the answer could simply be: none, the iPhone will handle it.

If you’d like to learn more about how to leverage Apple’s contactless payments technology into a new or pre-existing app or how your business can incorporate the technology into your user’s experience, contact us at findoutmore@credera.com.